Asia stocks mixed in cautious trade; central banks in focus

Trading in Asia was cautious on Thursday with central bank decisions in Japan and Europe in focus.

As expected, the Bank of Japan left its its monetary policy on hold at the conclusion of a two-day review and kept its economic assessment unchanged. Focus now turns to the European Central Bank's policy meeting, with some anticipating it could unveil new stimulus measures following dismal inflation and factory activity data.

"Whatever the outcome of tonight's meeting, the [market's] malaise is likely to be broken. The likelihood for surprise and disappointment is high which will see trading activity return, regardless of the outcomes," said Evan Lucas, market strategist at IG, in a morning note.

In geopolitical news, Russian President Vladimir Putin said on Wednesday that he spoke to his Ukrainian counterpart Petro Poroshenko on the phone and while there was no peace deal, Putin issued a 7 point plan to end the bloodshed in southeast Ukraine. Negotiators from Kiev, Moscow and pro-separatist rebels are due for more talks on Friday.

Australian shares extended losses into a second day, closing at a near one-week low despite stronger-than-expected trade data. July's trade deficit narrowed to A$1.36 billion, lower than the A$1.5 billion deficit that markets were expecting.